Virgin America lost $273.7 million from July 2007 through September 2008, including a $59.1 million loss in the third quarter of 2008, and finished the third quarter with $25.4 million in cash, the airline's financial filings with the U.S. Transportation Department show.

The filings also show an operating loss of $262.2 million over the same 15-month period, with $311.7 million in operating revenue and $573.9 million inoperating expenses.A Virgin America spokeswoman declined to discuss any changes to the airline's cash position since Sept. 30. In an interview with AviationWeek in November,CEO David Cush said the airline had returned to the investment market to bolster its initial capitalization of $312 million.

As of November, the airline had raised more than $400 million in total, Cush said, but he did not disclose the time period in which the additional capital wasraised. The filings with the DOT show the airline ended the fourth quarter of 2007 with $69.3 million in cash, the first quarter of 2008 with $30.3 million,the second with $11.1 million and the third with $25.4 million. It did not show any short-term investments.

Virgin America started service in August 2007. The DOT's Bureau of Transportation Statistics released the data from Virgin America's Form 41 filings today after Virgin America lost a nearly year-long battle to keep the information confidential.

The airline lost $34.8 million in the third quarter of 2007, $63.4 million in the fourth quarter of 2007, $52 million in the first quarter of 2008, $64.4 millionin the second quarter of 2008 and $59.1 million in the third quarter of 2008.

That means that through the first nine months of 2008, Virgin America lost $175.4million.

The airline's third quarter operating revenue climbed to its highest to date, at $114.2 million, but so did its operating expenses, at $168.5 million.

In a press release, Cush called the results "consistent with our expectations" and said the airline has seen "steady quarter-over-quartergrowth in unit revenue since launch." The airline's leadership is "pleased with our progress to date, especially given fuel price volatilityand economic uncertainty in 2008," he added.

"This is an industry with very high start-up costs and where large first-year losses are common," he said. "We're confident in our business model and arein a strong position as a well-financed start-up with solid revenue growth and load factors, a modern, fuel efficient fleet, a maturing route network, and award-winning service the public has embraced."

The data filed with the DOT also shows monthly load factors ranging from 78.4% to 82.1% from June through October of 2008. Virgin America noted that its third quarter 2008 load factor came to 81.4%, up from 77.6% in the second quarter.

British billionaire Richard Branson predicts either Delta or –- more likely –- United will eventually abandon flights to Australia. Branson says that's likely to happen as an extended price war unfolds around new service between there and the USA. "United or Delta are likely to go, probably United … (these airlines) can attempt to drive us out of business but we don't get driven out of business," Branson is quoted as saying by Australian newspaper The Age. Branson's comments come as Australia’s Virgin Blue prepares to launch V Australia, its trans-Pacific unit that's set to begin flying to Los Angeles on Feb. 28.

Branson's comments were made near Seattle as he was on hand to witness V Australia take delivery of its first 777 jet from Boeing. The Age says U.S.-Australian routes have "been a virtual monopoly for Qantas, with minor competition from United." And even in addition to V Australia's launch, Delta just announced plans to begin its own L.A.-Australia service beginning in July.

The Age writes "Sir Richard said something would have to give." Branson says: "Well, you have United, where the quality of service is dire. Qantas is a mixed bag of seats, some you can slide down … I think you are likely to see only two or three airlines on the route" once the competition shakes out. In the meantime, the Age notes U.S.-Australia routes have "been subject to an air fare war, with Virgin offering fares as low as (US $780 round-trip) between Sydney and Los Angeles."

Branson tells The Courier Mail of Brisbane he's "tremendously excited" to launch V Australia, even amid increased competition and the souring global economy. The paper notes it' will be "the first time an Australian-based competitor has challenged Qantas on the lucrative Sydney to Los Angeles route." Branson says: "We've created the best quality airline flying in the sky. As long as you create the best quality airline, you will survive and you will do well." The Sydney Morning Herald notes "V Australia will begin daily flights between Sydney and Los Angeles on Feb. 28, three months later than originally planned because of aircraft delays. It will begin three flights a week between Brisbane and L.A. on April 8."

Virgin Group Chairman Richard Branson, center, sees his new Boeing 777-300ER for the first time Friday at Boeing Field. He was taking delivery of the plane for his airline V Australia.

Virgin Group Chairman Richard Branson, center, sees his new Boeing 777-300ER for the first time Friday at Boeing Field. He was taking delivery of the plane for his airline V Australia.

Two aviation-industry billionaires had tough messages for Boeing workers at a reception before an airplane delivery at Boeing Field in Seattle Friday morning.

Steven Udvar-Hazy, chief executive of Boeing's largest customer, predicted that both Boeing and Airbus will sharply reduce their output in the coming months.

Udvar-Hazy said jet production could drop by a third in the next 18 months. That would inevitably mean layoffs of blue-collar workers locally.

And Richard Branson, chairman of the Virgin Blue group of airlines, in town to accept a new 777 from Boeing that was originally due before Christmas, described the delivery delay caused by the Machinists strike as "catastrophic."

Branson said that if there's a risk of further strikes in the future, he may not buy Boeing again.

Udvar-Hazy, chairman and CEO of International Lease Finance Corp. (ILFC), makes huge deals with both the big jet manufacturers and the airlines. ILFC owns the world's largest wide-body fleet and has 74 Boeing 787 Dreamliners on order. He's in a unique position to assess the true state of the aviation business.

His remarks were much more pessimistic than recent cautious statements from Boeing executives, who have declared production is completely solid at least through the end of this year.

Udvar-Hazy doesn't think so.

"By the fourth quarter, we could definitely see some adjustments," he said. "I'd like to see it sooner.

"It would not be surprising to us if there were 30 to 35 percent cuts over the next 18 months," he added.

He predicted the two major producers will deliver fewer airplanes next year than in 2009.

Udvar-Hazy also forecast a massive decline in orders this year.

"Airlines are focused on survival," he said. "Ordering new airplanes is not the flavor of the month."

In fact, he said, this year could see a net negative tally in the order books.

"It could happen that this will be the year when net cancellations and deferrals actually exceed the number of new aircraft orders," Udvar-Hazy said. "The elements are out there for that to happen."

The year has already begun with negative net orders for both Airbus and Boeing.

The European plane maker booked just four orders in January but lost 12 orders to cancellations, for a net reduction of 8.

Through Feb. 3, Boeing had booked 18 new orders, but canceled 31 for a net decline of 13.

At an interview at the reception, Branson expressed anger at how much the Machinist strike cost V Australia, the new international unit of his Virgin Blue airline in Australia.

His passengers were left stranded because V Australia's new 777-300ER, parked Friday on Boeing Field, wasn't available for the peak holiday-travel season down under, Branson said.

"It was a horrible mess that Boeing was on strike. We messed up tens of thousands of passengers over Christmas," he said. "We had to buy tickets on other airlines and scramble to get seats which weren't available. The financial damage in an industry where the margins are minute is catastrophic."

Boeing contracts typically include a provision that it is not required to pay airlines compensation for delays due to strikes.

"We're already thinking there's another lot of planes we want to order. Do we give it to Boeing or should we go to Airbus, which doesn't go on strike?" Branson said. "We have a choice. Do we have to come back to Boeing? If there's a danger of ever having another strike, we won't."

Despite ample financial backing, Virgin America had to fight a long battle for U.S. government approval. Other airlines questioned whether non-U.S. interests had excessive control over the new carrier.

The DOT finally approved Virgin America's certificate of appropriateness, but the carrier had to jump through hoops to show that it wasn't under too much control by the British Virgin Group and Sir Richard Branson. As part of that, it had to agree to replace the original chief executive officer, Fred Reid.

But Virgin America disclosed Feb. that it had lost $175 million in the first nine months of 2008 on revenues of $260 million, raising questions about whether it needed more money to keep going. While VA says it is adequately funded, rival Alaska Airlines asked the DOT on Tuesday to take a fresh look at Virgin America.

Alaska , which is competing with Virgin America along the West Coast, cites "recent media reports that call intoquestion" whether Virgin America is still complying with U.S. law.

Says Alaska Airlines general counsel Keith Loveless:

"Only through a careful and ongoing review of Virgin America's recent actions conducted on the public record can the DOT and public be assured that Virgin will remain a U.S. citizen. ...

"Since the issuance of their certificate, Virgin America's structure and operations have clearly changed; however, there is a lack of public information about those changes or how they may impact its citizenship status.

"Alaska makes this request to ensure all U.S. carriers are held to the same standard of compliance with U.S.citizenship laws. Recent questions about Virgin's ownership status establish a compelling need for a transparent review of its continuing compliance with these laws."

(We haven't found those recent media reports yet that called into question whether Virgin America wasunder foreign control, but we're still looking.)

UPDATE: Alaska Air's filing points to a Financial Times story from Jan. 18 in which it said the Virgin Group has hired Lazard to find new investors in Virgin America. Says the FT story:

Virgin Group founded Virgin America in 2005 with a pair of domestic funds, Black Canyon and Cyrus Capital Partners, to skirt US laws preventing foreign entities from owning a controlling stake in an American airline. The UK company now fears that the deepening financial crisis could prompt the two firms to exercise an option to recall their combined $150m investment in Virgin Americain the next month - eventually leaving Virgin Group the sole shareholder,people familiar with the matter said.

Lazard, in an appointment from both Virgin Group and Virgin America, is looking to line up potentialreplacements for Black Canyon and Cyrus, those people said. Virgin Group would in turn transfer the firms' ­ownership stake to new US investors once they had committed, remaining in compliance with foreign ownership rules.

Virgin America reported a first-quarter net loss of $40.3 million, narrowed from a net deficit of $52 million in the year-ago period, and the nearly two-year-old carrier said it ispoised to continue growing steadily.

President and CEO David Cush said, "Our first-quarter financial results exceeded our projections and we foresee continued strong revenue growth through the spring andsummer." Revenue jumped 90.8% to $100.8 million as capacity increased 68.7% to 1.4 billion ASMs. The privately held carrier did not provide specific traffic figures but said its RPMs doubled year-over-year and load factor was up 12.1 points to 73.1%.

Operating expenses rose 27.7% to $132.4 million and operating loss narrowed to $31.6 million from $50.8 million in the prior-year period. RASM lifted 13.2% to 7.21 cents while CASM lowered 24.3% to 9.46 cents.

Meanwhile, the US Dept. of Transportation earlier last week released a letter it sent to House of Representatives Transportation Committee Chairman James Oberstar (D-Minn.) stating that it is "reviewing. . .proposed transactions involving [VX's] United States shareholders." Oberstar had urged DOT to review whether VX still meets the requirements of US airline ownership and control laws, echoing earlier allegations by Alaska Airlines that the carrier now is wholly owned by the UK's Virgin Group.

VX, which insists it is in compliance, said Friday that it has "solid financing" and is"focused on smart growth for the long haul." During the first quarter it launched service to Boston from both Los Angeles and San Francisco. Last month it completed installation of the Gogo inflight Internet service on its fleet and offers the service on each of its 100 daily flights .http://www.atwonline.com/news/story.html?storyID=16909

Management at Virgin America believes Airbus A320s equipped with sharklets could be ideal for some of the transcontinental routes in its US network. Airbus launched the wingtip devices, which will become available on the A320 family from 2012, at the Dubai air show in November 2009. Finnair recently concluded a deal with Airbus to launch the sharklet for the A321."We're certainly interested in the A320 with sharklets," Virgin America CEO David Cush recently told ATI on a flight celebrating the launch of the airline's first international service to Toronto. He explains that not only do they improve fuel burn but also add "some range and performance which is very helpful in the winter flying from the East Coast to California".Cush expects Virgin America to add sharklets to its aircraft "as soon as they're available". But Virgin America has no immediate interest in retrofitting its current fleet of 28 Airbus narrowbodies with sharklets if Airbus decides to offer customers that option. Cush says the fuel savings for the retrofitted aircraft, "would certainly be less than the 3% they're offering on the factory install". Since a number of the carrier's aircraft start coming off lease in 2016, the investment is not worthwhile. "Basically as those aircraft come off lease we can replace them with aircraft with sharklets," Cush says."The sharklets do put a lot of additional stress on the wing, and I would just feel more comfortable from a long-term maintenance perspective having the strengthening on the wing that Airbus is going to do as they put the sharklets on at the factory."Asked about the prospects of new narrowbody aircraft in development Cush says that "there are very interesting airplanes that are coming out, if you look at the fuel and the overall cost efficiency of the CSeries. Our very strong hope is that Airbus will find a way to react to that technologically, be it a new engine, be it continued improvement in aerodynamics so that we can stay with the single fleet."But Cush says that Virgin is not afraid to look at offerings from other manufacturers. "We certainly cannot be competing against airlines that have a 15% fuel burn advantage. If there is a more competitive airplane out there and it looks like the aircraft that we're flying now will be uncompetitive long-term we'll have to take a look at it."When asked about a potential re-engined A320, Cush says Virgin America is "quite interested" in the option. "We're still talking about perhaps 2020 or 2025 for a completely new aircraft and that's a long time to forgo what could be a 12 to 15 percent efficiency improvement that's something that's to big to be ignored, in our opinion."

In its specifications for the geared turbofan, P&W claims a 16% improvement in fuel consumption at the engine level and 20-25% improvement on next-generation aircraft such as the CSeries.

It was only when discussions over Virgin America's memorandum of understanding with Airbus - unveiled at last year's Farnborough air show - moved into their final phase, says Cush, that Virgin America expressed an interest in becoming the launch customer for the A320neo.

However, "once Airbus made the decision [to re-engine] we never looked back", says Cush. Virgin America plans to take delivery of 30 current-generation A320s from 2013 to 2016, followed by 30 A320neos for first delivery in early 2016.

Virgin America aims to decide on an engine type for all 60 aircraft in around four to five months, says Cush, who adds that Airbus is interested in a "line of sight" of the engine selected by the first A320neo customers.

Cush believes Virgin America has more leverage in negotiating an engine order for 60 aircraft versus 30. He says that while Virgin America is a CFM International customer with its current A320 fleet, "the Pratt engine seems a little further along", as the GTF will log some years of service before Virgin America takes delivery of its first A320neo in 2016. But he also highlights the strong support GE, a joint venture partner with Snecma in CFM, has provided to Virgin America.

The A320neo's extra 500nm (925km) of range not only allows Virgin America to serve Boston-San Francisco with a full payload year-round and the US West Coast to Hawaii, but also has the thrust and take-off performance to operate flights from the currently perimeter-restricted airports of New York LaGuardia and Washington National.

While no plans exist to lift the restrictions, Cush says the A320neo would allow Virgin America to operate nonstop from the airports if the restrictions are lifted.

Virgin America will apply to the US Department of Transportation (DOT) for the authority to fly from its San Francisco base to Washington National Airport in the third quarter.

The airline is proposing to fly two daily roundtrip flights on the route using its 119-seat Airbus A319 aircraft.

The proposed flights would complement Virgin's existing service to Washington-Dulles, which the carrier launched in 2007. The carrier currently operates four daily flights between Dulles and San Francisco, along with twice-daily Los Angeles service.

Service between National and the US West Coast has historically been restricted by a 2,012km (1,250mi) perimeter rule, but the US government has allowed a limited number of longer-haul flights.

The recently passed reauthorization bill for the Federal Aviation Administration created eight new beyond-perimeter slots earmarked for new entrant or limited-incumbent carriers, of which Virgin is applying for four. Each slot represents one takeoff or one landing.

There is currently no service between the two airports, but United Airlines plans to launch one daily roundtrip beginning in May with 124-seat Boeing 737-700s inherited from its merger with Continental Airlines.

The FAA reauthorization also allowed four incumbent carriers -- American, Delta, United, and US Airways -- to each convert two of their existing slots at National to beyond-perimeter slots.

In support of the proposed service, Virgin America CEO David Cush says in an interview that "San Francisco is the second-largest beyond-perimeter market from Washington" and is "much larger than Denver, and Phoenix, and other places that already have multiple frequencies."

The airline also believes its service, if approved, would yield positive benefits for consumers.

"As a low fare carrier and new entrant, we have had a demonstrated impact on fares since our launch in 2007," said Virgin America VP of Corporate Communications Abby Lunardini. "We have typically seen fares drop by 30% in less competitive long-haul markets we have entered from SFO."

Cush also noted that previous beyond-perimeter slot proceedings "favoured Western hubs" because they "focused much more on network utility than O&D [origin and destination] utility. That's been changed with this order. This order says that O&D utility is as important as network utility."

Cush adds that Virgin is the "best" airline to provide "fair competition" on the route, otherwise there would be "another United monopoly market from SFO."

Cush predicts the airline will be able to fly the route with a full passenger load as the carrier is upgrading the thrust on its CFM56 engines powering its A319 aircraft. The upgrade is expected to be complete by the end of May. National's longest runway is only 2,094m (6,869ft), potentially creating operational challenges for certain aircraft and routes.

Cush also says the carrier's sharklet-equipped A320 aircraft, the first of which is set to arrive next year, will fly on the route if Virgin receives approval.

"In all likelihood, once we get a sharklet-equipped aircraft that's the first place it would go." Cush adds. "Our preliminary numbers show that we can carry close to a full load for us, probably in the 140 [passenger] range." Virgin's current A320 aircraft seat either 146 or 149 passengers.

When asked how the new service could affect Virgin's Dulles service, Cush replied: "we certainly would not" reduce capacity on the route if the airline were to only receive enough slots for one frequency.

A capacity reduction is also "not in the plans" if two roundtrips would be scheduled, "but we have to look at it in terms of market demand and aircraft availability", he says.

No other new-entrant or limited-incumbent carriers at National have applied to receive some of the new beyond-perimeter slots. Applications are due to the DOT by 12 March.

he carrier will now take delivery of 10 Airbus A320 planes, down from its original order for 30, in 2015 and 2016, according to a statement today. Those 10 aircraft are the last of the original batch, as the first 20 were to be handed over to the Burlingame, California-based airline from 2013 through 2015. Virgin America also deferred the delivery range for 30 A320neo-model jets to 2020 through 2022 from the original dates of 2016 through 2019. The moves followed last month’s disclosure of a capacity reduction from January through March, the first cut in available seats since the airline started flying in 2007. “During the summer we started looking at whether it still made sense to grow as fast as we were planning on, given fuel prices and what I’ll say is a modest economic growth climate in the U.S.,” Chief Executive Officer David Cush said in a telephone interview. “You don’t invest the capital if you can’t earn an adequate return.” There were no financial penalties associated with the cancellation, he said. Virgin America projected annual growth in available seat miles to be a mid-single-digit percentage for the “next several years,” down from the 28 percent rate of the past three years. The airline now flies 52 single-aisle A320s. The A320neo model is Airbus’s latest variant of the plane and is due to enter service in late 2015. Carriers typically buy at a discount to list prices, which are $88.3 million for the A320 and $96.7 million for the neo, according to Airbus. Wider Loss

Virgin America also reported that its third-quarter net loss widened to $12.6 million from $3.3 million a year earlier. Revenue jumped 27 percent to $368 million. The closely held company ended the period with $75 million in unrestricted cash. Capacity will be trimmed by about 3 percent in the first quarter to cut costs, Cush told employees in an October memo in which he also offered voluntary short-term leave to employees. A surplus of employees took the voluntary leave offer for the first quarter and will return to work in April, Cush said in the interview. He declined to specify the number of employees. The company sought voluntary reductions through short-term leave and flex scheduling because of an anticipated drop in traffic in the first three months of 2013, Cush wrote earlier in a letter to employees. The company has about 2,400 employees, according to today’s statement. Unprofitable Flights

Virgin America will eliminate some flights that are traditionally unprofitable during the first three months of the year such as overnight and midweek flights, and will restore that service in April when demand typically improves, Cush said. The airline doesn’t plan to drop any cities, though it will reduce the number of departures in cities including Boston, Cush said in the interview. Virgin America flies to cities including San Francisco, Los Angeles, Las Vegas, New York’s John F. Kennedy airport and Boston. Looking ahead to 2013, the airline expects capacity to be unchanged to slightly larger than in 2012, Cush said. Virgin America will end this year with capacity up 28 percent from 2011. “The simple math out of that is we think we’re big enough right now for the time being,” Cush said. “The rapid growth we’ve had for the last few years is going to come to a stop.” Virgin America may need to pursue a “major restructuring” to survive in the long term, according to Hunter Keay, an analyst at Wolfe Trahan & Co. in New York. Virgin America has competition on every route, such as San Francisco to New York. Each of the 11 other airlines Keay follows has a monopoly on at least 25 percent of their routes. ‘Network Missteps’

“A combination of cash burn and network missteps into highly trafficked markets” is hurting Virgin America, Keay said in an October telephone interview. “They had an assumption that consumers would choose product quality over price and convenience, and network carriers responded with force.” In an Oct. 17 note to clients, the analyst questioned Virgin America’s ability to survive and said its failure would benefit Alaska Air Group Inc. (ALK) and JetBlue Airways Corp. (JBLU) the most. Cush disagreed with Keay’s report, specifically the idea of a flawed business model and poor performance compared with Virgin America’s established competitors, he said. Keay “came to the wrong conclusions,” Cush said. “We will prove that over time.”